Why U.S. securities law compliance is crucial for foreign issuers in the U.S. market
Unpacking the risks for foreign issuers pursuing U.S. investors
Investor rescission and damage claims
Personal liability for control persons and salespeople
SEC and state enforcement
Criminal exposure
Filing deadlines
Why compliant U.S. securities practices should be a priority to issuers
Offerings that do not fit an exemption
Investors may have bought without the disclosures, investor qualification checks, or other protections the exemption requires.
Investors carry the cost: capital committed on incomplete information, and the expense of pursuing claims across borders to recover it.
Sales through unregistered introducers
An introducer paid by the issuer may appear to act for the investor. Introducers include migration agents, consultants, Golden Visa specialists, online referral sites, and some immigration attorneys.
Investors who buy through unregistered introducers lose the best-interest duty, FINRA supervision, and the formal dispute forum that registered brokers provide.
Commission arrangements the investor does not know about can shape the advice the investor receives.
Misstatements and omissions in marketing
Investors make investment, immigration, and tax decisions based on offering materials, webinars, websites, road show events, and sales conversations.
In residency-by-investment offerings, common examples are residency and citizenship timelines presented without the risk of legislative change or administrative delay, regulation is broadly claimed without clarity about whether foreign jurisdiction regulation is a substitute for U.S. regulation, investment performance is over-promised, and claims of tax efficiency are made without adequately consideration of U.S. tax rules.
When statements are false or leave out material facts, investors can lose capital, time, and tax benefits they were told to expect. Beyond losing tax benefits, U.S. investors face punitive taxation and steep penalties for filing and computational failures rooted in non-compliant tax documentation.
Read more: U.S. Tax Traps in Golden Visa Funds
Exposure for issuers
Securities violations first harm U.S. investors. Investors can then seek rescission or damages from the issuer, its managers, and the people who sold the offering. Rescission means unwinding the purchase. Regulators can bring civil actions, and willful violations can be prosecuted as crimes.
Tax statements in marketing are securities statements. An issuer that markets an offering as QEF-eligible and then issues a defective PFIC Annual Information Statement can face tax and securities exposure at the same time.
Read more: Why accurate U.S. tax reporting is crucial.
Harm to U.S. investors
Rescission and damage claims by U.S. investors
An investor who bought in an offering that was not registered and did not fit an exemption can sue to rescind the purchase. The investor recovers the price paid, plus interest, less any income received. An investor who has already sold can claim damages. The investor does not have to prove fault (Securities Act § 12(a)(1)).
These claims can be brought against anyone who sold the security or solicited the purchase for financial gain, which can include paid introducers (Pinter v. Dahl, 1988).
Material misstatements or omissions in connection with the purchase or sale of a security can support damage claims (Exchange Act § 10(b); Rule 10b-5).
Contracts made in violation of the Exchange Act or the Advisers Act can be void as to the party that violated it (Exchange Act § 29(b); Advisers Act § 215).
Directors, officers, and managers who control a violator can be held jointly liable (Securities Act § 15; Exchange Act § 20(a)).
Each state has its own securities laws. Many give investors a right to rescission, some without proof of intent and some with longer time limits than federal law.
Claims are more likely when an investment loses value or immigration timelines and conditions change.
Personal liability for control persons and salespeople
Liability reaches individuals, not only the issuer. Directors, officers, managers, and others who control a violator can be held jointly liable with it (Securities Act § 15; Exchange Act § 20(a)). A control person avoids liability only by showing they acted in good faith and had no reason to know of the violation.
Salespeople and introducers who successfully solicit a purchase for their own financial gain can be sued directly for rescission when the offering was not registered and did not fit an exemption (Securities Act § 12(a)(1); Pinter v. Dahl, 1988). This can include migration agents, consultants, Golden Visa specialists, and immigration attorneys paid for referrals.
A person who receives transaction-based compensation for bringing investors into an offering, without broker-dealer registration, can be charged by the SEC as an unregistered broker (Exchange Act § 15(a)).
A salesperson who passes on false statements with intent to defraud can be liable for fraud even when someone else wrote the statements (Exchange Act § 10(b); Rule 10b-5(a) and (c); Lorenzo v. SEC, 2019).
Under most state securities laws, officers, directors, employees, and agents who materially aid an unlawful sale are jointly liable with the seller. Their defense is to show they did not know, and with reasonable care could not have known, of the violation (Uniform Securities Act, adopted in some form by most states).
The criminal provisions below apply to individuals as well as entities.
SEC and state-level enforcement
The SEC can enforce the Investment Company Act to void contracts made in violation of that Act. Key provisions of the Investment Company Act relevant in the Golden Visa market include (Investment Company Act § 47(b); FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd., 2026):
§ 7 Unregistered Status: A fund or other entity operating as an investment company that fails to register with the SEC (and lacks a valid safe harbor or exemption) enters into commercial, advisory, or capital-raising contracts.
§ 7(d): foreign investment companies are barred from utilizing U.S. interstate commerce to conduct a public offering.
§ 13 Fundamental Policy Shifts: Executing contracts or investment strategies that deviate from the fund's (or other vehicle’s) fundamental investment policies or asset concentration limits without a prior shareholder vote.
§ 17 Affiliated Transactions: Entering into principal transactions, asset sales, purchases, or joint arrangements between the fund (or other investment vehicle) and an affiliated person, promoter, or principal underwriter without an explicit SEC exemption.
§ 18(i) Equal Voting Rights: Issuing shares to U.S. investors that lack meaningful voting rights, creating share classes with unequal or disproportionate voting power, or failing to give every share equal voting status relative to all other outstanding voting stock (unless an explicit multi-class exception under Rule 18f-3 is fully met).
§ 15 Adviser & Underwriter Contracts: Failing to have a written contract; failing to obtain initial approval by a majority of outstanding voting securities; missing the mandatory provision that the contract automatically terminates upon assignment. Also triggers if the board's annual renewal process (15(c) process) is deficient or relies on misleading data.
§ 34(b) Destructive Disclosures: Including material misstatements or omitting critical facts within contracts, registration statements, or official proxy materials.
In fraud cases, the SEC and the Department of Justice can reach two kinds of conduct (Securities Act § 22(c); Exchange Act § 27(b)):
conduct in the U.S. that is a significant step in a violation
conduct abroad with a foreseeable substantial effect in the U.S.
The SEC can charge fraud in the offer or sale of a security based on negligence alone (Securities Act § 17(a)(2) and (3); Aaron v. SEC, 1980).
Issuers that pay transaction-related compensation to unregistered introducers can be charged with causing or aiding and abetting the introducer’s violation (Exchange Act §§ 20(e), 21C).
SEC remedies include court orders barring future violations, disgorgement of profits, civil penalties, and bars from serving as an officer or director.
In September 2025, the SEC formed a Cross-Border Task Force. It investigates U.S. securities law violations by foreign-based companies and by gatekeepers, such as auditors and underwriters, who help those companies reach U.S. investors.
In July 2026, the SEC formed a Retail Fraud working group. The press release announced,
“The Retail Fraud Working Group will leverage staff and resources across the Commission to identify fraud and other misconduct targeting retail investors, including offering frauds, pump-and-dump schemes, market manipulation, and breaches of duties to customers by investment advisers and broker dealers. The working group will serve as a dedicated resource for proactive case generation, play an important role in coordinating with the Commission’s regulatory partners and foreign counterparts, and participate in educational outreach to retail investors in coordination with the SEC’s Office of Investor Education and Assistance."
State securities regulators retain their authority to investigate and bring fraud actions, including against offerings that rely on federal exemptions (Securities Act § 18(c)).
U.S. criminal legal exposure for issuers
Securities Act § 24 makes willful violations of the Securities Act, or of SEC rules under it, a crime. The penalty is fines and up to 5 years in prison.
Exchange Act § 32(a) makes willful violations of the Exchange Act or its rules, including Rule 10b-5, a crime. The penalty is up to 20 years in prison and fines of up to $5 million for individuals and $25 million for entities.
Advisers Act § 217 and Investment Company Act § 49 make willful violations of those Acts crimes. The penalty is fines and up to 5 years in prison.
18 U.S.C. § 1343 (wire fraud) makes it a crime to use emails, calls, webinars, or wire transfers that cross state lines or U.S. borders in a scheme to defraud, or to obtain money by false statements. The penalty is up to 20 years in prison.
18 U.S.C. § 1341 applies the same penalties to mail fraud.
18 U.S.C. § 1349 applies the same penalties to attempts and conspiracies to commit wire or mail fraud.
18 U.S.C. § 371 applies to conspiracies to commit securities offenses. The penalty is up to 5 years in prison.
18 U.S.C. § 3571 sets the maximum fine for most felonies at $250,000 for individuals and $500,000 for organizations, or twice the gain or loss, unless the offense carries a higher fine.
Read More: About that SEC vs Banco Espirito Santo case
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The U.S. securities calendar
Filing deadlines
Issuers relying on Regulation D file Form D with the SEC within 15 calendar days after the first sale (Rule 503). Form D is public.
For offerings that continue, Form D is amended each year, on or before the anniversary of the last filing.
Most states require a notice filing and fee within 15 days after the first sale to an investor in that state. Some states require annual renewals.
Durable exposure
Rescission claims by investors for unregistered offerings: one year after the investor’s purchase, and no more than three years after the security was first offered to the public (Securities Act § 13; P. Stolz Family Partnership v. Daum, 2d Cir. 2004). Each new investor’s one-year period starts at their own purchase.
Rule 10b-5 claims by investors: two years after the investor discovers the facts, and no more than five years after the violation (28 U.S.C. § 1658(b)).
State law claims by investors or state regulators: time limits vary by state and can exceed federal statutes of limitations.
SEC civil penalties: five years after the violation (28 U.S.C. § 2462).
SEC disgorgement: five years, or ten years for violations that require proof of intent or recklessness (Exchange Act § 21(d)(8)).
Criminal securities fraud: six years (18 U.S.C. § 3301).
A U.S. Review Before Capital is Deployed
Golden Visa Direct reviews offshore Golden Visa investments through a U.S. lens: offering structure, tax exposure, legal obligations, and global positioning. Golden Visa Direct is fully independent and takes no commissions from funds, managers, or agents. We work exclusively for the benefit of U.S. clients.
See Services.
For tax exposure review only, consider a PFIC Triage Assessment or Exposure Diagnostic.
